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The architect of the $3.1 billion privatization of Hwy. 407 says an additional $1 billion could be returned to Ontarians in reduced tolls and property taxes if the provincial government were willing to act.

Jodie Parmar, former vice-president of the Ontario government’s privatization secretariat and a key player in the City of Toronto’s sell-off of Union Station, has spent more than a year trying to pitch Queen’s Park on a novel money-saving scheme.

But Parmar’s innovative proposal has been received with skepticism — despite Premier Dalton McGuinty’s Liberals facing an $18.7 billion budget deficit and lagging in public opinion polls with an election set for Oct. 6.

“They’re not interested,” the internationally known privatization expert told the Star in an interview in Toronto.

“Where is the suggestion box that would allow the people of Ontario to come forward to the government with ways to improve the delivery of government services?”

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At issue is that Parmar, who now runs his own firm, expects to be paid handsomely for his advice.

On March 11, he was informed by government lawyers that they “are not amenable to any of your proposed compensation arrangements” though they would be pleased to study his scheme.

Chris Morley, McGuinty’s chief of staff, said he would be willing to meet with Parmar to discuss his plan but for the unusual demands for payment.

“We’re prepared to sit down with him. His requests, including a job until death as a deputy minister or an appointment to an Ontario hydro organization, are just not the way the government conducts business,” said Morley.

Parmar counters that he was just trying to offer a creative compensation solution.

“I’m a private consultant. (Payment is) contingent upon it working. I’m not saying pay me in advance and I’ll just give them a box of Cheerios. Your lawyers, your experts, have to tell you that this (plan) will work.”

The impasse raises questions about the obligations of former public officials and how much governments should be willing to compensate them for their expertise — especially when potentially large savings are at stake.

Parmar’s initial proposal is to collect 2.5 per cent of anything he finds, a percentage he likens to a real estate agent’s fee on a house purchase.

So if he identified an additional $1 billion that could be returned from 407 International Inc. to Ontario taxpayers in reduced tolls, municipal property tax revenues and other fees, he would receive $25 million.

While he emphasizes he is willing to be flexible on compensation and would accept far less — including a lifetime posting as a deputy minister or a hydro board appointment — he noted that the $1 billion is money the province might otherwise never see.

“That’s the frustrating part. Give me the time of day. I’m very credible,” he said, laughing, before pointing out he also helped former Toronto mayor David Miller with the $640 million Union Station revitalization deal.

Expressing surprise that government lawyers and advisers have yet to discover the loopholes allowing the province to control tolls and force the 407 company to pay more property taxes to municipalities bordering the highway, Parmar is reluctant to divulge his secret.

But he confided that buried in the 15-centimetre thick privatization contract and the 1999 provincial legislation that enabled it are little-known sections favourable to Queen’s Park.

“There is a clause between the governing agreements and the legislation that . . . would allow the province to change the rules of the game without compensation,” said Parmar.

“It’s somewhat arcane, but there is a very specific section that talks about the government and 407 sitting down and talking every five years and talking about what needs to change,” he said, declining to elaborate.

“This is based upon my informed interpretation, upon my knowledge of the governing agreements and the legislation that are in the public domain and not any confidential information.”

Parmar stressed that 407 International — owned by Spain’s Cintra Infraestructuras S.A., the Canada Pension Plan Investment Board, and SNC-Lavalin — is unlikely to accept any new terms because it would cost the company valuable revenue.

“Let’s face it, whatever the government does is going to get litigated,” he said.

Indeed, 407 International vice-president Kevin Sack pointed out that disputes over tolls have been resolved since the company’s successful 2006 settlement of a legal action filed by the McGuinty administration.

“We have closely examined the agreement and legislation and continue to be confident that the company operates in compliance with all agreements and legislation,” said Sack.

“The agreement has been the subject of legal reviews in the past and all matters were settled appropriately in 2006.”

Court records show Parmar testified as an expert witness for 407 International in that case.

In August 1998, at the behest of then Progressive Conservative premier Mike Harris, Parmar spearheaded the sell-off of the electronic toll-way north of Toronto. The $3.1 billion agreement for a 99-year lease was concluded in May 1999.

While he maintains it was a good deal for the Ontario treasury, motorists have complained about soaring tolls and administrative fees.

It now costs between 19.35 cents and 22.95 cents per kilometre for a passenger car depending on the hour of day plus a flat 50 cent per trip charge.

There’s also an annual transponder lease fee of $21.50 or a $3.65 per trip video toll charge for those without an electronic collector.

When McGuinty took office in 2003 his government went to court to try to roll back tolls, but was forced to settle in 2006.

Last week, Transportation Minister Kathleen Wynne announced that Hwy. 407 would be extended to Hwy. 35/115 outside Peterborough by 2020, and that the province — not a private company — would reap the benefits of tolls.

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